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“In the Obama Administration, entrepreneurs are welcome.” So said Aneesh Chopra, chief technology officer of the United States, in a keynote speech yesterday at “DC to VC,” a summit on healthcare IT investing organized by Morgenthaler Ventures partner Rebecca Lynn in San Francisco and co-sponsored by Silicon Valley Bank and Venrock. Speaking to a group of venture capital partners, entrepreneurs, and media representatives at the posh St. Francis Yacht Club, Chopra argued that under Barack Obama’s leadership, the federal government is doing more than ever before to adopt the latest infotech innovations coming out of Silicon Valley, and to shape federal regulation to encourage entrepreneurial solutions to big challenges like improving public health and nutrition.

I had a chance to delve into the specifics of the administration’s pro-entrepreneurship policies with Chopra in a one-on-one interview after his speech (see below). But the big picture, for the charismatic New Jersey-born son of Indian immigrants, is that the government sorely needs the ideas of its citizens—especially programmers—and that it can best stimulate those ideas by making the government’s vast troves of data more accessible to outside developers, and then getting out of the way to see what they build.

As a case in point, he cited the story of Dave Augustine, Bob Burbach, and Andrew Carpenter, three developers from San Francisco-based non-profit WestEd Interactive who came up with a new way to search the antiquated Federal Register as part of the Sunlight Foundation’s “Apps for America” contest. “The Archivist of the United States found out about Bob and Dave and Andrew in March, and said, ‘You guys have built the best killer app I’ve seen, can you rebuild the Federal Register website?’ and they said, ‘Sure,'” Chopra recounted. The new FederalRegister.gov, launched this summer, makes it easy to browse the once-impenetrable collection of government notices, rules, procedures, and documents by topic or date. “These were just random dudes who didn’t have lobbyists or procurement departments, but just smart ideas—‘cognitive surplus,’ as Clay Shirky would say.'”

President Obama named Chopra as the nation’s first CTO in April 2009. As an associate director within the Office of Science & Technology Policy, Chopra’s formal assignment was to work with chief information officer Vivek Kundra to set federal technology policies that would make government more efficient and more transparent. “The goal is to give all Americans a voice in their government and ensure that they know exactly how we’re spending their money,” the President said when he appointed Chopra.

But Chopra has gone far beyond that initial charge, becoming known as an outspoken advocate for making government databases more accessible to developers of consumer software applications, using open source software more widely within government, and spurring innovation through prize-based competitions. Obviously, those are all causes dear to the hearts of most private-sector innovators and entrepreneurs, and Chopra has become a popular figure in Silicon Valley and other innovation hubs. Even before joining the Obama Administration, Chopra, the former secretary of technology for former Virginia Governor Tim Kaine, had been labeled a “venture governmentalist” for his efforts to invest in high-risk internal technology projects. Bay Area technology guru Tim O’Reilly has gone so far as to call Chopra a “rock star,” saying that he “understands that government technologists need to act more like their counterparts in Silicon Valley.”

In his speech at the Morgenthaler summit, Chopra gave numerous examples of the way the Obama Administration is opening government data to entrepreneurial uses. One was the Apps for Healthy Kids competition, a part of First Lady Michelle Obama’s campaign to reduce childhood obesity; the winners of the contest, which challenged entrants to create computer games or tools that make “fun and engaging” use of USDA nutrition data on 1,000 commonly eaten foods, were announced by the White House last month. Chopra said the developer of “Smash Your Food,” one of the winners of the $60,000 competition, got so excited about the power of software to help people eat better that he quit his job at Microsoft to commercialize the project. “The point is, by opening up government data we believe we’ve opened up a new channel of public participation,” said Chopra.

Chopra’s visit to San Francisco coincided with a sequence of healthcare information technology events this week on the West Coast. In addition to the Morgenthaler summit, the Health 2.0 conference gets underway today in San Francisco, and in La Jolla, CA, north of San Diego, the Wireless-Life Sciences Alliance is holding its Wireless Health 2010 conference. Chopra said part of the point of his swing West was to spread the word about the new opportunities being opened up to entrepreneurs by changes in the way the government is administering bonus payments for the adoption of electronic medical record systems. One of the big changes is the advent of “modular certification”—meaning, in essence, that physicians and hospitals can get Stimulus Act incentive payments for adopting electronic medical records technologies piecemeal, as long as each piece meets government criteria for making “meaningful use” of electronic health record technology.

I spoke with Chopra about that and other subjects after his presentation at the Morgenthaler summit. A transcript of our conversation follows.

Xconomy: First a question on healthcare IT. One of the issues that has come up in our coverage a lot is that the companies we talk to who would like to be innovating in this space still don’t understand what is meant by “meaningful use,” and a lot of doctors who would like to be more sophisticated about using technology in their practices don’t quite understand yet what they would have to do to qualify for a “meaningful use” incentive. Is there clarity coming on what really constitutes meaningful use for electronic medical records?

Aneesh Chopra: First of all, thank you for the question. I would say one is never satisfied at the degree to which they’ve communicated a policy message. But that’s in part why we were here today. We were not only looking to speak to the folks in the room but hoping to communicate through the press and the webcast to all startups and to those who are in the ecosystem, so they’re more familiar with the facts.

I’m not so sure that it’s that they don’t know about meaningful use. Let me tell you what I’m hearing from the entrepreneurial community: It’s that they’ve heard of meaningful use, but they don’t believe that they can participate. Because they presume that they have to build an application where competitors have been in the market for 30 years. To catch up to them at this point, it’s like saying, well, “Am I going to build a startup to compete with Netflix?” So our policy decision to open up the market by allowing modules to be certified allows, now for the first time, entrepreneurs to compete not on the full list of applications, but on the specific areas where they think they can grow some particular competitive advantage in a niche.

Now, that’s the message that I am trying to communicate as loudly as I can. If you want to participate in the program, find the module where your application can sing, certify that module, and then proceed, because the ecosystem will support great applications and find a way to bring them to the physician community.

Now on the provider side, I don’t have a direct link to many of the providers. There are others in the Health and Human Services domain who are focused on the provider outreach. In fact, David Blumenthal [the Department of Health and Human Services’ national coordinator for health information technology] has been giving keynote speeches to every major society. He is traveling all over the country. He has probably hit half of them at this point. So we are doing everything we can to get the word out in those medical communities. There was a survey conducted, and I think we have data that shows that 85 percent of the physicians surveyed indicated that they were not only aware of meaningful use but that they were going to participate.

So, are we where we want to be? No. Are we at ground zero? No. We’re probably moving up the chain in terms of getting the word out and participation. Because the first payment kicks in in March of 2011, I think we are in a good spot to now ramp up the first batch of certified applications, which is the list that doctors should choose from when they buy these applications, just got published October 1st, and will be growing with time. So I think now the market is getting a little more knowledgeable.

X: So people can now start to look at the examples and see what’s been certified.

AC: You can look at the certified applications, you can learn more about it. And I will make one more observation. We did something that I think has not really been featured in any research in this area, or published in any way. We funded a program called Regional Extension Centers. These are what I would call the Geek Squad for healthcare IT, whose mission is to knock on doors, talk to doctors, and support them all the way from what this program is to getting them installed to getting them to work with vendors in a way that’s more competitive for them. And those Regional Extension Centers are in every corner of the country. And we literally have a target of over 100,000 doctors served by these extension centers in the coming years. So it’s not just about getting the word out, it’s also about building up the capacity and the infrastructure to support physicians and hospitals who need the support in order to transition to this entirely new world from a technology standpoint.

X: I didn’t know about those extension centers.

AC: Yeah, we have a whole program, and they have a national support network. Actually its a great example of entrepreneurship. In order to stand up this instant virtual organization, they needed a capability to keep in touch with who has got what responsibility with what doctors, and in the spirit of cloud computing, they were early adopters of Salesforce.com’s government service. And so now they’re able to turn on their infrastructure and have a whole working organization in relatively short order, because they didn’t have time to do the typical five year government procurement cycle. They are going to come and go by the time that’s all said and done.

X: I want to switch gears slightly. I really liked your story about Bob, David, and Andrew at WestEd Interactive.

AC: Call them! They’re here in the Bay Area. WestEd.org.

X: I will. So my question is, it’s great to hear stories like that of the federal government being much more open to quickly adopting an innovation like that when it makes sense. But are there guidelines in place to encourage people who do that kind of innovating for the government to then take those ideas and turn them right back into products and profit? How can you engage with the government and be an entrepreneur?

AC: That’s the whole point. I mean, the Apps for Healthy Kids contest—I highlighted a graphic of an application called Smash Your Food. And the builder of that application had a day job. His wife was a nutritionist and they heard about the contest. And maybe it hit them at the right time or maybe there some other circumstances. But they were one of the award winners, and they came to the White House for the award ceremony, and I chatted them up. And the guy said, “I’ve quit my day job, and I’m going full force on this program, because I think there is a market opportunity to help families with nutrition planning.” So he’s an example, and there were probably three or four in the winning categories where they had an explicit commercialization plan. They dabbled in this because they were keen to know what it was all about, were excited about the prospects, and now have decided to become entrepreneurs.

So part of the Challenge.gov concept, part of our prize policy, is not only to tap into the creativity of the American people to help solve national problems, but to inspire them to be entrepreneurs so they can go off and build new businesses of value and succeed in the economy writ large. That’s what the President said when he signed the small business bill, saying, “Look, the entrepreneurs, the startups, they are the engines of economic growth in this country, so if we can play a modest part from an open government standpoint–releasing information, commercializing that, and encouraging folks to create value—then we are in a great spot.”

I just met this dude sitting over there. [Chopra was referring to Nick Desai, CEO of Global Fitness Media, a Los Angeles company that has built an online nutrition app called GoodFoodNearYou.com.] He doesn’t have a government application, but he’s actually doing the reverse. We passed a law in health reform that requires restaurants to publish their menus from a nutritional standpoint. Well, he had already been partnering with that. He thinks of that data as liquidity to feed his mobile app that will help you find local food options that are healthier for you. It was a great story.

Is this guy some kind of PhD physics genius? I have no idea. The point is, we have created a policy framework that says this data has value. He is an entrepreneur, and he’s finding a way to make not only the data itself have value but to build on top of that data. That data becomes infrastructure for the 21st century economy. And I think that is the spirit of a lot of this. A lot of what we do on the technology side of the President’s administration is to think about transparency and data as a policy lever itself.

My favorite example was—I have a three-and-a-half year old and a one-and-a-half year old. So, you would not know this—have you ever put in a car seat?

X: My brother has young children, so I’ve struggled with car seats, yes.

AC: It sucks! You stick your knee in it. You’ve got to push it around. Argh! Who would have known that the National Highway Traffic and Safety Administration has a database of the ease of installation of every car seat sold in America. It sat in a file cabinet. We have released that data, and I’m hopeful some entrepreneur will grab it and build an app that will help you choose a product that is easier to install.

X: Something like “BestBabyCarSeat.com.”

AC: I don’t know, why not? That’s the point. In small and in big ways, we think we can tap into this creativity and make a big difference.

X: Last question. You mentioned Challenge.gov and there’s obviously a lot of excitement generated by big prize competitions like the X Prize.

AC: Yes, but this little one—Apps for Healthy Kids—40,000 people registered their support. There were a hundred-plus applications of which 95 were qualified, all for $60,000. The money isn’t the point.

X: Well, that’s my question. Whether there is a huge prize or a little prize, there is only one winner, generally. From one perspective it seems like an inefficient way to allocate resources, because in the end the competition only has one winner. Only one team winds up getting the resources to really go and build their technology, and everybody else who put in all that work gets nothing. But you’re saying there is this larger effect.

AC: Well, it’s funny. You’re making an efficiency argument, and it’s actually quite the opposite. You’re paying for results. So, in the case of the Automotive X Prize, there is a specific result you are looking for—a car that can go a hundred miles per gallon. So that specific goal, you are going to put money towards it. What we normally do in R&D is we fund ideas that we think have merit, if the person passes scientific peer review. So the R&D investment is really about betting on the person, and hoping that they can thrive. And there’s room for that in the portfolio. What we’re saying is, it’s not an either/or. In the portfolio of approaches to drive breakthroughs and innovation, a component should be prizes and competitions.

We do think the focus on results makes it a higher return on investment for taxpayer dollars because the likelihood you are funding no result doesn’t exist, because then you wouldn’t award the prize. We also think that there are spillover benefits. So in the most recent X Prize for automobiles, the winning team was from Lynchburg, Virginia, but one of the most inspiring teams was the West Philly inner city school kids, who made it all the way through the round of 12 or 10 or whatever it was, and just didn’t make it to the final lump. But they have gotten such support! They’ve gotten publicity and attention and sponsorship. So, they win too. And who knows what those individual team members will do in their future. So society benefits from their having participated, even if they didn’t win.

It all depends on the outcome goal you are trying to achieve. If you are trying to hit a particular price per unit of service, then you’ve got a rigid construct. But if you are trying to tap into creativity, you don’t really care to have one winner. Our Apps for Healthy Kids was $60,000. We divided that up into $10,000, and $5,000, and $3,000 chunks so we ended up giving 12 prizes. In each individual example we gave a very limited amount of money—but they didn’t need the money. They wanted the chance to participate.

X: So we’ll see more of those kinds of competitions.

AC: Yes. Tons more. That’s my job.

Wade Roush is the producer and host of the podcast Soonish and a contributing editor at Xconomy. Follow @soonishpodcast

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